Most music journalists and bloggers believe that the CD has started its decline, and that by implication, digital distribution will be the future for recorded music. The Lefsetz letter, for example, had as their number one prediction that CD sales would continue to tank. (Their number four prediction, that EMI was heading for disaster, has been confirmed less than a fortnight into the year.) As far as classical music is concerned, this change can't come too soon. The only advantage the CD has over most digital delivery formats is sound quality, and there are rumblings that this aspect of recorded music is being addressed as well.
The biggest problem with the CD is that except for the rare works that take up a whole CD or an enlightened record company whose releases simulate recitals, most CDs of classical music are collections by an individual composer. Except for rare occasions, public concerts of classical music are seldom devoted to an individual composer -- they tend more towards a cross section of music from several eras. The problem is more apparent with CDs than it was with LPs, because with LPs, the listener had to get up at the end of a side of the record, which provided him or her with an opportunity to play something different for the next selection. Some record players even had stacks, so the listener could program several selections, much more similar to what one would hear at a recital. Of course, a listener can also program a CD player, but really, how many times do we ever make use of that capability?
Digital playback systems, such as iTunes, even provide the capability to shuffle between several different multi-movement works, playing each work in sequence, using the shuffle-by-album feature. A listener could have a playlist of chamber music, for example, and could ask for a random shuffle between entire works. Unfortunately, this capability is also thwarted by the current electronic music stores, where the album mirrors the CD layout. For a chamber music shuffle system to work correctly, each work would require its own album name (String Quartet No. 12 in E-flat Major, for example). An iTunes or emusic user can make these changes fairly easily, but it is somewhat time consuming. It would be far easier if works were distributed as works, and not as part of an antiquated concept of an "album." At least the iTunes store groups movements together and lets customers purchase the works as a whole (often for a variable price).
Once the sound quality issues are resolved (and decent liner notes would be a plus), digital playback systems will have it all over CD playback.